Saturday, March 14, 2009

Mexico's state oil company has an overly optimistic outlook for the giant Cantarell oil field this year, the Paris-based International Energy Agency said on Friday.

Cantarell, one of the largest oil fields ever discovered and which provided 60% of Mexican production at its peak, has declined faster than expected in recent years. This has eroded Mexico's overall crude output and exports. State-run Petroleos Mexicanos is now scrambling to find and develop new pools of oil to compensate.

The IEA, a think-tank for oil-consuming countries, predicts average production of around 600,000 barrels a day at Cantarell in 2009, compared with Pemex' target of 756,000 barrels a day, according to the IEA's monthly Oil Market Report.

Last year Cantarell output fell by one-third to an average of 1 million barrels a day, dragging down overall Mexican production by 9% to a 13-year low of 2.79 million barrels a day....MORE

As the former Governor of Arizona, Secretary Napolitano is probably as aware as anyone of the interplay between Mexico's economy, politics and drug cartel violence. Still, it is a bit troubling that Phoenix is the kidnapping capitol of the United States, with an average of one per day last year. From Fox News:

Homeland Security Secretary says the plan would include more resources aimed at stopping U.S.-acquired firearms and cash earned from illicit drug sales flowing back across the border.

Homeland Security Secretary Janet Napolitano said the Obama administration would soon unveil a plan for dealing with rising violence along the U.S.-Mexico border, including more resources to stem the flow of dollars and guns to warring drug gangs, the Wall Street Journal reported.

"I think there will be some announcements with some specifics that either I or the president will be making in the coming weeks," Napolitano said Friday during an interview.

Napolitano said the plan would include more resources aimed at stopping U.S.-acquired firearms and cash earned from illicit drug sales flowing back across the border. Money and guns are fueling the escalating violence in Mexico that is spilling into U.S. communities, including in Arizona. Napolitano was the state's governor before joining the Obama cabinet....MORE

One potential concern with this approach is Venezuela. Back in 2005, Mr. Chavez bought 100,000 Kalashnikov's (along with some cruise-missile capable submarines) from Russia.